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The effect of shared services on administrative intensity

The effect of shared service centres on administrative intensity in English local government

BSG-WP-2017/021

The public sector operates through a large array of specialised and decentralised organisations. This has many advantages, including greater mission focus, better access to relevant information for decision making, clearer accountability, and increased responsiveness to citizen needs and preferences. However, there are also several drawbacks, including a degree of inefficiency arising from suboptimal organisational size and the duplication of similar activities across multiple agencies.

In this working paper, the authors examine whether a solution to this dilemma is for public sector organisations to amalgamate and “share” their back-office administrative tasks – like HR, accounting and procurement – whilst otherwise remaining separate, specialised entities. This is a popular reform solution in many countries, the hope being to generate large economies of scale and scope without damaging organisational autonomy. But there has yet to be any rigorous evaluation of whether “shared services” do actually increase efficiency.

In the case of English local government, the authors find that the widespread adoption of this reform has had no significant impact on administrative efficiency. They suggest a number of reasons why this might be the case, and highlight the policy implications and research agenda arising from the research.

About the authors

Dr Thomas Elston is Senior Research Fellow in Public Administration at the Blavatnik School of Government

Dr Ruth Dixon is Research Fellow at the Blavatnik School of Government